As we tread deeper into the crypto winter, we begin to see the bodies of those who didn’t prepare well. With Ethereum plummeting over 95% from its all-time high, projects left holding Ethereum are left thigh and dry. Research has shown that a significant portion of projects keep their funds in crypto, for example, Golem holds 369,023 ETH (valued at $33 Million)

Winter is here

We start to see of layoffs at various crypto startups, including those behind top currencies such as Steemit and Ethereum. Many of these companies were not prepared for cryptocurrencies to take such an intense nosedive in price, thereby taking a significant portion of their funds and runway. We compiled a list of companies who have announced layoffs and the amount of staff laid off.

Consensys – 13% Staff laid off

Consensys, the company backing Ethereum is reducing workforce by 13%. This New York based company is one of the largest companies in crypto works on real-world solutions using Ethereum. Currently the restructuring is seen as the birth of “Consensys 2.0″, a brand new direction for the company. Whilst this might be the case those remaining, one employee took to reddit to voice grievances.

ETCDEV – complete shutdown

ETCDEV, the leading Ethereum Classic development company is shutting down and stopping all development. Igor Artamonov stated in a tweet that ETCDEV can no longer keep afloat. Whilst this is a strong blow to the ETC community, the price of ETC has not plummeted to zero – there are other development teams at work on this decentralized projectSteemit Inc – 70% of Staff

Steemit Incorporated, laid of 70% of their workforce citing the price of STEEM going below the “worst case scenario“. This restructuring also resulted in a significant cut in the scope of the company – with the social media arm being cut. Steemit Inc will now focus primarily on the development of the STEEM blockchain rather than on the social media website steemit.com. DASH – Defensive Measures

DASH Core Group (DCG) sent out a pre-emptive notice that they will not make any drastic cut backs. However, the group has made cuts to stipends and ad hoc contributors who work on non-essential features. DCG has been under fire over the past year for having a high burn rate of 240,000 USD per month (allocated from by masternode voting). Bitmain – R&D center cut

Bitmain, the mining equipment manufacturer cut an entire research and development devision in Isreal with 23 staff. The center was called BitmainTech Israel and was established in 2016 to work on blockchain technology and artificial intelligence.

A Fresh New Start

One recurring theme with this wave of “restructuring” that it marks a new beginning. In many ways, crypto startups, especially those who raised an ICO were living a fantasy. During the bull market, VCs were throwing money at anyone who could talk blockchain. Unfortunately, it is clear that a lot of these companies had no experience in financial management, nor any clue how to generate revenue to sustain long term operations. Whilst it might seem news of layoffs is a signal for doom and gloom in the blockchain space, I see it as a necessary step for the future.

Let’s face it, we can’t live in a fantasy land where the money comes easy and results don’t matter. Crypto startups need to think about how to generate profit in the long term and find a way to sustain their operations.

The Skattestyrelsen, Denmark’s tax agency, is reportedly looking into 2,700 bitcoin traders who reportedly owe the government taxes for gains made trading the flagship cryptocurrency between 2015 and 2017.

According to a press release that was publish recently, the Skattestyrelsen claims an unnamed Finnish cryptocurrency exchange was where the traders operated. It claims that they bought and sold around $8 million worth of BTC in total, but failed to declare their earnings.

As such, the agency is going after these individuals. Kevin Bergen, Skattestyrelsen’s tax director, was quoted as saying:

"Right now we are identifying the individual citizens and keeping the new information up to those we already have. If something does not match, we will contact them and ask for more information. However, how many people it is and what it may mean, it is still too early to say."

It’s currently unclear which cryptocurrency exchange was involved. However it is reported that Finland was the party to have tipped off the tax agency regarding this situation.Finland is also known as the home for the well-known peer-to-peer bitcoin exchange LocalBitcoins. The exchange has earlier this year added anti-money laundering (AML) and know your customer (KYC) checks for some of its traders.

Bergen added further that he believes this is “probably the tip of the iceberg,” implying the tax agency may in the near future go after other traders. Per his words, as it gains more knowledge “about data mining, segments and methods in general” it will become “wiser in the area” to better control transactions.

Australian Government Passes Law Forcing Tech Companies To Break Encryption

The Australian Parliament has passed a law ordaining compelled access to encrypted devices and communications. The legislation was floated months ago and opened up for comment, but it appears the Australian government has ignored the numerous complaints that such a law would violate civil liberties and otherwise be an all-around bad idea. But that's OK. It's completely justified, according to the Prime Minister.

Scott Morrison, Australia’s prime minister, told local radio on Thursday that encryption laws were necessary to target Islamist terrorism, paedophile networks and organised crime. “These laws are used to catch the scum that try to bring our country down and we can’t give them a leave pass,” he said.

Sure, and if innocent people find their communications compromised by government-mandated holes, so be it. The law was rushed through Parliament in a late evening session since every moment wasted was just one more leave pass for scum. Legislators promise to review the law in 18 months to ensure it hasn't been abused or created more problems than it's solved, but let's be honest here: how often does legislation like this get clawed back after a periodic review? It's never happened in the history of the laws governing our surveillance programs, even after leaked docs exposed unconstitutional practices and widespread abuse of surveillance authorities.

Here's a short summary of the new powers the legislation hands over to law enforcement and national security agencies:

The law enables Australia’s attorney-general to order the likes of Apple, Facebook, and Whatsapp to build capability, such as software code, which enables police to access a particular device or service.

Companies may also have to provide the design specifications of their technology to police, facilitate access to a device or service, help authorities develop their own capabilities and conceal the fact that an agency has undertaken a covert operation.

This law will go into effect before the end of the year. How it will go into effect is anyone's guess. The law provides for compelled access -- including the creation of new code -- but no one seems to have any idea what this will look like in practice. The new backdoors-in-everything-but-name will be put in place by developers/manufacturers at the drop of a court order, with the onus on the smart people in the tech business to iron out all of the problems.

The law only prevents the government from demanding that "systemic weaknesses" be built into devices or programs. Everything else is left to the imagination, including the actual process of introducing code changes in multi-user platforms or targeted devices.

An actual software developer, Alfie John, has put together a splendid Twitter thread pointing out the flaws in the government's assumptions about software development. Since the compelled participants are forbidden from discussing surveillance court orders with anyone (which would include coworkers, supervisors, the general public, etc.), these requested alterations would have to be implemented in secret. The problem is coding changes go through a number of hands before they go live. Either everyone involved would need to be sworn to secrecy (which also means being threatened with jail time) or the process falls apart. Changes ordered by a court could be rejected by those higher up on the chain. Worse, the planned encryption hole could see the compelled coder being viewed as a data thief or foreign operative or whatever.

Law enforcement is going to have to make everyone involved in the product/device complicit and covered under the same prison threat for this to work. The more people its exposed to, the higher the chance of leakage. And if the code will break other code -- or the request simply can't be met due to any number of concerns -- the government make ask the court to hold the company and its personnel in contempt for their failure to achieve the impossible.

To make matters worse, the company targeted with a compelled access request may be monitored for leaks before and after the request is submitted, putting employees under surveillance simply because of their profession.

In some cases, the only weakness that can be introduced will be systemic, which will run contrary to the law. How will the government handle this inevitable eventuality? Will it respect the law or will it simply redefine the term to codify its unlawful actions?

Even if all of this somehow works flawlessly, users of devices and communications platforms will be put at risk. Sure, the compelled access might be targeted, but it will teach users to distrust software/firmware updates that may actually keep them safer. The government may even encourage the forging of credentials or security certificates to ensure its compelled exploits reach their targets. And just because these backdoors theoretically only allow one government agent in at a time, that doesn't mean they aren't backdoors. They may be slightly more difficult for malicious actors to exploit, but once the trust is shattered by compelled access, other attack vectors will present themselves.

It's a terrible law justified by the spoken equivalent of a bumper sticker. And it's going to end up doing serious damage -- not just in Australia, but all over the world. Bad legislation spreads like a communicable disease. If one democracy says this is acceptable, other free-world leaders will use its passage as a permission slip for encryption-targeting mandates of their own.